Nation’s pending home sales recover in June, grow 1.5 percent

WASHINGTON — After declining for three straight months, pending home sales reversed course in June as all major regions, except for the Midwest, saw an increase in contract activity, according to the National Association of Realtors.

The Pending Home Sales Index, a forwardlooking indicator based on contract signings, climbed 1.5 percent to 110.2 in June from an upwardly revised 108.6 in May. At 0.5 percent, the index last month increased annually for the first time since March.

Lawrence Yun, chief economist for the NAR, said the bounce-back in pending sales in most of the country in June is a welcome sign.

“The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs,” he said. “Market conditions in many areas continue to be fastpaced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria.”

Yun said reduced inventory remains a factor in the nation’s real estate market.

“Low supply is an ongoing issue holding back activity,” he said. “Housing inventory declined last month and is a staggering 7.1 percent lower than a year ago.”

Yun did note that there could potentially be a sliver of increased hope in the months ahead for prospective first-time buyers, who continue to struggle in finding and financing homes. Sales to investors last month were the lowest of the year (13 percent), which helped push all-cash transactions to 18 percent — the smallest share since June 2009 (13 percent).

“It appears the ongoing run-up in price growth in many areas and less homes for sale at bargain prices are forcing some investors to step away from the market,” Yun said.

“Fewer investors paying in cash is good news, as it could mean a little less competition for the homes firsttime buyers can afford,” he said. “However, the home search will still likely be a strenuous undertaking in coming months because supply shortages in most areas are most severe at the lower end of the market.”

Heading into the second half of the year, Yun said, he expects existing-home sales to finish around 5.56 million, which is an increase of 2.6 percent from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 5 percent. In 2016, existing-home sales increased 3.8 percent, and prices rose 5.1 percent.

Pending home sales in the Northeast inched forward 0.7 percent to 98.0 in June, and is now 2.9 percent above a year ago. In the Midwest, the index decreased 0.5 percent to 104.0 in June, and is now 3.4 percent lower than June 2016. Sales in the South rose 2.1 percent to an index of 126.0 in June and are now 2.6 percent above last June. The index in the West grew 2.9 percent in June to 101.5 but is still 1.1 percent below a year ago.